The Star Online: Business
The Star Online: Business |
- Blue chips higher in early trade, BAT, KLCCP climb
- New projects bump up UOA’s GDV to RM15bil
- Yayasan Iqra set to elevate Islamic endowment
| Blue chips higher in early trade, BAT, KLCCP climb Posted: 03 Oct 2012 06:39 PM PDT KUALA LUMPUR: Blue chips advanced in early trade on some mild buying of consumer heavyweight BAT and KL Kepong, in line with the firmer key regional markets. At 9.23am, the FBM KLCI was up 3.58 points to 1,653.33. Turnover was 74.80 million shares valued at RM51.75mil. There were 139 gainers, 69 losers and 150 counters unchanged. Asian stocks advanced as reports on US jobs and service industries beat economist estimates, easing concern the world's biggest economy is slowing, Bloomberg reported. At Bursa Malaysia, BAT rose 28 sen to RM61.28, KLCCP 12 sen to RM6.02 and KLK 10 sen to RM21. Scientex rose 14 sen to RM2.59 on its RM283mil plan to expand its manufacturing capability for the products by acquiring GW Plastics Holdings' two plastic packaging units. KrisAssets added 12 sen to RM2.82 and Pharmaniaga seven sen to RM7.57. Lafarge fell 22 sen to RM8.74, Amedia 13.5 sen to 85 sen, DLady eight sen to RM43.10, Genting six sen to RM8.84 and Public Bank four sen to RM14.36. |
| New projects bump up UOA’s GDV to RM15bil Posted: 03 Oct 2012 06:33 PM PDT Outperformed (maintain) Target price: RM2.30 UOA Development Bhd's total gross development value (GDV) has increased to RM15bil from its initial public offering guidance of RM13bil, thanks to its new projects at Jalan Ipoh and Kepong, which exclude the potential 15% to 20% upside to Bangsar South's remaining GDV of RM5bil due to the area's run-up in capital values. The group is targeting RM3.1bil to RM3.2bil of new launches (mainly affordable segments) over the next 12 to 18 months in highly sought-after locations. Cash proceeds from sale of its en bloc offices of RM298mil means UOA can comfortably undertake Bangsar South's next growth phase, while ensuring it meets our expected financial year 2012 and 2013 net yields of 7.6% to 6.9%, higher than the sizeable Malaysian real estate investment trusts of around 4.5% to 5.%. To recap, UOA in the first half of this year registered RM900mil sales. Our 2012 target of RM1.2bil is achievable with its en bloc sales to Lembaga Tabung Haji (LTH) of RM204mil and ongoing project sales, including the recently previewed Desa Green with GDV of RM600mil. The group has three more Horizon office blocks, of which two will be kept for rental while the remaining is earmarked for sale. Assuming similar sale price as LTH's, or RM102mil per block, with transaction by year-end, it will increase its estimated financial year 2012 core earnings by 13% to RM305.0mil in addition to higher sales. Upon completing of the three en bloc sales (one to DKLS Industries Bhd and two to LTH), the group will have amassed an additional RM298mil cash, in addition to its second quarter ended June 30 cash pile of RM137mil and ongoing billings. UOA is now in a net cash position while its two latest (Jalan Ipoh and Kepong) pieces of land have already been paid for. Based on the abovementioned GDV on Bangsar South, we estimate UOA's capital commitments will be around RM100mil-RM150mil per annum for the next three to four years, which can be easily funded by borrowings. In terms of landbanking, the group did express interest in doing niche developments in Iskandar Malaysia although no timeline or specific plan was offered. We believe it is a step in the right direction as we view Johor as the next growth market. We are confident of dividend payouts on the back of unchanged financial year 2012 and 2013 estimated core earnings and sales of RM1.2bil to RM1.5bil. In addition to the capital commitments and assuming minimum RM1bil per annum sales and conservative 30% net margin, we believe it will not affect dividend payouts that average around RM150mil per annum for the next two to three years. By RHB Research Institute Outperform (initiate coverage) Target price: RM3.53 IHH Healthcare Bhd is a global private healthcare service provider with operations in three markets, namely Singapore, Malaysia and Turkey. The company owns 60% equity stake in Acibadem Saglik Hizmetleri & Ticaret AS (Acibadem), which is Turkey's largest hospital chain, as well as an 11.2% stake in India's private healthcare operator Apollo Hospitals. Following the acquisition of Acibadem in January 2012, the company is the second-largest private healthcare service provider in the world (behind HCA Holdings of the US), and has expanded its operations across eight countries. IHH's core operations are located in Singapore, Turkey and Malaysia, which accumulatively accounted for between 91.9% and 92.8% of revenue for financial years ending Dec 31, 2009 until 2011. Singapore and Turkey have a relatively large working population which we believe would remain sustainable over the longer term given the increasing trend of non-residents seeking job opportunities there. Additionally, both countries are common destinations for medical tourists given their strategic locations as well as the advanced medical technology available in each country's hospitals. As for Malaysia, a declining trend in public healthcare expenditure as a percentage of total healthcare expenditure and an improvement in insurance coverage are expected to sustain earnings growth in the country moving forward. We forecast financial year 2012 to 2014 core net profit growth of 5.8%, 25.9% and 26.0% respectively, driven by hospital expansion plans across all operating segments and improving earnings before interest, tax, depreciation and amortisation (EBITDA) margins to between 20.4% and 22.4% per annum. This will mainly be attributable to better operating leverage and margin expansion in both Parkway Pantai Ltd and Acibadem. We expect IHH's operations in Singapore to be the main earnings driver for the company with the newly-opened state-of-the-art Mount Elizabeth Novena hospital. The first phase of the Novena hospital comprises 183 beds. Management has guided that plans to open the second phase with 153 beds in the second half of 2013 remains on track, and the initial target of turning the hospital operations EBITDA positive by mid-2013 remains intact. Our assumptions are driven by expectations that the hospital's operations would be fully ramped-up by 2014; and an inflation rate of 5% to 8% per annum across all Singapore hospitals. Our forecast implies a 3-year net profit compounded annual growth rate (CAGR) of 58.1% and core net profit CAGR of 18.8%. Our target price implies a 36.9 times calendar year 2013 (CY13) price-earnings ratio (PER). While valuations for IHH are relatively expensive at 33.5 times CY13 PER compared to its peers', we believe there is room for IHH's valuations to move higher given its strong earnings visibility and its wider network of hospitals, which could result in significant savings from better economies of scale compared to its regional peers. By Kenanga Research Outperform Target price: RM2.80 SapuraKencana's latest order book was RM14.5bil while the other local heavyweights, Malaysia Marine & Heavy Engineering has an order book of RM2.8bil and Bumi Armada has an order book of RM7bil. Even excluding the longer-term Petrobras contract worth RM4.3bil (which will only kick start by end- 2014), SapuraKencana possesses the largest domestic order backlog. The order book also seems to be growing as it has been consistently winning new contracts, albeit 2012 being a relatively sluggish domestic contract award year so far. Year-to-date, it has locked in around RM3.3bil of new wins, and we are pretty sure it will be one of the local participants for at least another marginal field when Petronas finally kick-starts the award rounds, expected later this year. Forward prospects seem similarly bright where current tender book was guided at a hefty RM25bil. In our view, SKPETRO is a strong contender within the domestic engineering, procument, construction market and pretty much the market leader in the domestic installation and commissioning segment. As such, continual domestic contract wins is unlikely to be an issue. Globally, SapuraKencana footprint now spans South-East Asia, North America, Brazil and Australia. Hence, further international wins are also highly possible. The company is currently undergoing asset expansions, which will further support its chances in securing new contracts. Our financial year 2013 and 2014 net profit estimates are driven by its current sizeable order book and maiden contributions from its first marginal field (Berantai). Earnings trend from 2015 onwards earnings could be significantly higher on account of the Petrobras contract starting up, full year earnings from Berantai and potential cost savings as SpauraKencana mobilises more of its own assets. BOUSTEAD HEAVY INDUSTRIES CORP BHD Hold (maintain) Target price: RM2.60 THE largest beneficiary of national defence projects Boustead Heavy Industries Corp Bhd (BHIC) announced that its 51%-owned sub-subsidiary, Contraves Advanced Devices Sdn Bhd (CAD) has received a letter of award (LOA) from its 21%-held Boustead Naval Shipyard Sdn Bhd (BNS) for a RM203.8mil engineering and integration contract in relation to the second generation offshore patrol vessels (OPV) project which carries a ceiling price of RM9bil (awarded to BNS on Dec 11). CAD will procure, engineer and integrate a Combined Integrated Communication System and Communications ESM System into the DCNS SETIS Combat Management System over a 10-year implementation period, commencing in October. BHIC also clarified that this contract is a recurrent party transaction, for which a shareholder mandate has been received during the company's AGM on April 5. The LOA does not come as a surprise as we have highlighted previously that BHIC is bound to benefit substantially from the RM9bil OPV contract given its leading role in weaponry, combat system, vessel design, naval electronics etc. With the latest contract, BHIC has secured RM1.7bil worth of contracts related to the RM9bil OPV project on track to meet our expectation of winning RM2.1bil worth of contracts from BNS. Therefore, we maintain our earnings forecast. Despite the contract award, we believe that there is no near-term catalyst in sight as we remain concerned on its outlook due to the massive losses from its commercial shipbuilding business (estimated more than RM30mil losses). The second half will be challenging for BHIC as contributions from the OPV contract will only start kicking in by second half of next year. |
| Yayasan Iqra set to elevate Islamic endowment Posted: 03 Oct 2012 06:27 PM PDT KUALA LUMPUR: Yayasan Iqra, a foundation promoting wealth creation through Muslim endowment principles, is set to make corporate Islamic endowment Malaysia's third financial force. Board of trustees member Datuk Seri Idris Jusoh, who is also Mara chairman, said Islamic endowment principles ensured transparency and accountability in managing finance while weaning off reliance on the Government for funds. "As we have seen in Greece and Spain, attempts by the respective governments to reduce the national debt have met with protests. "In the long run, finances for projects and community-based activities can come from Islamic endowment, which will help ease the Government's financial burden," he told a press conference here yesterday. Under its proposal, individuals and the corporate sector will commit shares or financial instruments as endowment with a portion of the profits returning to the principal sum and the remaining channeled to the community. Idris said the foundation had begun talks with various government agencies and state Islamic religious councils to meet its objective. "At present, only the public and private sectors generate finances for various projects. "We are pleased that the Prime Minister recognises the importance of Islamic endowment playing a role in the nation's economic well being while giving returns to the rakyat," Idris said. Fellow board member Tan Sri Muhammad Ali Hashim cited Johor Corp as an example of successful management of Islamic endowment, which was now worth RM21bil. Muhammad, who is president of the Malaysia Islamic Chambers of Commerce, said Malaysia could become a global hub for Islamic endowment, following its success in Islamic banking and finances. |
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